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Europe close: Shares jump as China opens automobile sector further

By Alexander Bueso

Date: Tuesday 22 May 2018

Europe close: Shares jump as China opens automobile sector further

(Sharecast News) - Stocks on the Continent finished the day higher, buoyed by news that China was set to open up its automobile sector more, even as traders waited on political developments in Italy.
Boosting shares of carmakers across the Channel, Beijing announced it would slash its duty on imported passenger cars from 25% to 15%, effective from 1 July.

Meanwhile, in Italy, President Sergio Mattarella was due to meet the leaders of both chambers of the country's Parliament, with a decision on whether to grant the Five Star and League a mandate to form a new government likely on Wednesday or Thursday, although according to UniCredit Bank an announcement was possible as soon as later in the evening.

However, later reports in local daily La Repubblica were indicating that the approval process of a new Prime Minister might take at least until Thursday.

Against that backdrop, by the end of trading the benchmark Stoxx 600 had gained 0.27% or 1.07 points to close at 396.64, alongside a rise of 0.71% or 92.20 points to 13,169.92 for the German Dax and a 0.54% or 124.19 point bounce for Milan's FTSE Mibtel to 23,216.57.

During the previous session, the Italian benchmark index plumbed a six-week low as the yield on the benchmark 10-year Italian government note (BTPs) hit its highest mark in over a year.

However, on Tuesday the yield on 10-year BTPs eased off a little, retracing six basis points of the prior day's advance to 2.33% as prices rallied, although several analysts appeared skeptical about the margin for a recovery.

Bond yields move in the inverse direction to their prices.

The Cac-40 meantime also traded higher, nudging up by 0.05% or 2.59 points to 5,640.10, albeit after breaking out to its loftiest levels since early 2007 during the week before and with its pre-financial crisis highs of 6,089.91 now beckoning on the horizon.

From a sector standpoint meanwhile, the Stoxx 600's gauge of Autos & Parts climbed 1.03% to 648.97.

No major economic reports were set for release on Tuesday in the euro area.

However, one report cited Finnish central bank chief and ECB governing council member Erkki Liikanen as having said it would take time before core inflation supported headline prices.

In the corporate space, M&A continued to be prominent, amid news that US outfit Elliot Management had purchased a stake in German steel maker Thyssenkrupp, driving shares of the latter sharply higher.


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